US Economy Contracts 0.3% in First Quarter 2025

The U.S. economy contracted by 0.3% in the first quarter of 2025, marking its first decline in three years, largely due to a surge in imports as businesses rushed to bring in goods before President Trump's tariffs took effect. This slowdown followed annualized growth of 2.4% in the previous quarter and was exacerbated by reduced consumer spending and a significant drop in federal government expenditure. While headline GDP figures looked weak, underlying measures of economic strength, such as business investment and core growth indicators, remained relatively solid. However, many analysts warn that this stability could be fleeting, as the full impact of the tariffs is expected to further dampen consumer and business activity in the coming months. Trump's trade policies, including steep tariffs on Chinese goods, are credited with disrupting financial markets and global trade patterns, with forecasters anticipating further economic headwinds. The GDP report is viewed as the first clear indicator of the tariffs' economic impact, though it only partially reflects their effects since large-scale tariff implementation began in April.